Two significant setbacks have rattled Britain's life sciences sector recently, raising fresh concerns about the country’s appeal as a hub for pharmaceutical research and development. The US pharmaceutical giant Merck has abandoned plans for a £1 billion research centre in London, while AstraZeneca has also paused a £200 million investment to expand its research operations in Cambridge. These decisions come amid persistent worries over the UK's business environment and drug pricing policies, which companies argue are undermining investment incentives.

Merck, which operates as MSD in Europe, cited the UK’s challenging commercial landscape and insufficient government backing for life sciences as key reasons for scrapping the London centre. The company announced it would shift research activities to its existing sites primarily in the United States, resulting in the loss of approximately 125 jobs in London. According to statements from Merck, the UK government’s undervaluation of innovative medicines and lack of adequate sector investment made the country "uninvestable" for them. This move is consistent with Merck’s broader US investment strategy, including substantial new biologics facilities in Delaware and North Carolina. The cancellation marks a blow to UK government ambitions to grow life sciences as a strategic economic sector.

AstraZeneca’s decision to halt a planned £200 million expansion in Cambridge, which was projected to create 1,000 new jobs, echoes Merck’s concerns. This follows an earlier cancellation of a £450 million vaccine manufacturing plant in northern England, which the company attributed to reduced government support. Like Merck, AstraZeneca has pointed to the UK's difficult business climate and is reassessing its investment needs amid these pressures. Together, these moves have prompted debate within UK political and industry circles about the future competitiveness of Britain's pharmaceutical sector.

The root of these investment pullbacks appears closely linked to ongoing tensions over NHS drug pricing policies. Pharmaceutical companies argue that current pricing structures undervalue innovative medicines, limiting their revenues and capacity to fund large-scale R&D investments in the UK. UK health officials have signalled intentions to restart pricing negotiations following Merck’s withdrawal, recognising the potential risk of a declining life sciences investment climate. Some government voices have pointed to short-term fiscal constraints within the Treasury as a contributing factor, while critics suggest that pharmaceutical firms are leveraging these challenges to push for more favourable terms.

These developments have also attracted diplomatic attention. In September 2025, the US Ambassador to the UK reportedly urged the British Chancellor to revise drug pricing policies to be more attractive to global pharmaceutical companies. This high-level engagement underlines the strategic importance both governments place on biopharmaceutical cooperation, but also highlights the current strains in UK investment attractiveness.

Paradoxically, these setbacks come at a time when UK-based drug-discovery companies are embracing artificial intelligence to revolutionise how medicines are developed. This new generation of life sciences ventures offers hope for revitalising the industry by transforming traditional processes and reducing development costs. However, the recent high-profile investment withdrawals underscore the pressing need for clearer and more supportive government policies to maintain the UK’s standing as a premier global life sciences centre.

In summary, the double retreat by Merck and AstraZeneca serves as a stark warning to UK policymakers. Without addressing the underlying concerns about drug pricing, investment support, and the broader business environment, Britain risks losing its competitive edge in one of its most strategically important sectors just as technological innovations promise to reshape the industry’s future.

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Source: Noah Wire Services